According to Finances Online, there were over 68 million Crypto wallet users in 2021. The number continues to grow as new blockchain wallets and cryptocurrencies are rolled out to the market. Currently, digital wallets are the de facto way to access your digital assets. Instead of holding the actual money, cryptocurrency wallets offer an easy and secure way to store cryptocurrency.
Today, we’ll find out how you can build a crypto wallet in 2023 and have a closer look at this solution.
Under the hood of crypto wallets
Crypto wallets are a type of blockchain-based wallet that enables users to send, get, and spend digital assets. Wallet programs are usually integrated into either a software, exchange, or hardware environment. Every wallet, regardless of its environment, consists of two keys – private and public.
A public key is a string of digital symbols accessible to any user. It is used as a bank account that receives funds. A private key is a string of randomized symbols that allows the user to enter the wallet. In simple terms, a public key hides data from unauthorized use, while a private key unlocks it for a wallet’s owner.
The many faces of digital wallets
On a high level, all wallets can be divided into custodial and noncustodial ones. The former store the keys on a third-party platform, while non-custodial ones allow the user to generate the keys on their own. Non-custodial wallets are among the most popular options to access funds since they’re easier to manage. Custodial wallets, in turn, also come in different flavors.
As the name implies, this type of software resides in crypto exchanges. Since users acquire decentralized funds on exchanges, the cryptocurrency is automatically stored in your exchange-hosted wallet. Being custodial, your private keys are also stored on the platform.
For the most part, keys on exchanges are generated and remain on the developer’s servers without reaching users’ devices.
In this case, a wallet is installed locally on your computer. Local crypto wallets must be downloaded only from the official website of the company. Otherwise, users can stumble on a phishing wallet version and lose their savings. Exodus, Jaxx, and Electrum Bitcoin are prominent examples of desktop wallets.
These wallets are most popular with first-time users and are usually offered on the websites of major cryptocurrency exchanges. They can store any currency you buy, help you sell it quickly, or transfer funds to other users.
Users can access web wallets through a browser from anywhere in the world. The main downside of web-based wallets is the potential risks of hacker attacks.
Blockchain-based apps are also among the leading options to accommodate users’ asset needs. Mobile crypto wallets are a new way to store cryptocurrencies. They allow users to hold their digital assets in a mobile-based application instead of traditional hardware wallets.
Mobile crypto wallets can be used for both storing and trading cryptocurrencies with ease. They are also more convenient than traditional hardware wallets and offer the same level of security. Mobile applications enable the user to enter their transactions on the go. Digital assets are stored on mobile devices, including private keys.
Building a digital wallet: step-by-step
According to Statista, the number of crypto wallets has drastically increased over the last few years. While in March 2021, the figure stood at 10.65 million users, it skyrocketed in 2022 to 83.4 million.
Now that you’re on good terms with the fundamentals, let’s see how you can build a crypto wallet.
Business planning and analysis
No software project can be built on a hunch. Building a bespoke wallet solution is no exception. Before starting a project, you need to analyze the niche, audit competitors’ functionality, and develop a thorough understanding of your target audience. The result of this stage should be a high-level project brief so that your development team can kick off the project fast. Later, the project details will be specified.
Taking bids and estimating the project
Since the estimation is different at each company, you’ll need to take a bid from the company to find out the price. The team will provide a ballpark estimation and assign a timeline to the project. We recommend developing a Minimum Viable Product first to reduce development costs and validate the viability of your solution.
UI & UX
Based on the best user flow patterns of your competitors, your UI/UX team will come up with a unique app design for your crypto wallet. The user’s journey should be well-organized, intuitive, and succinct.
Make sure your functionality isn’t scattered all over the screens but is conveniently packed in a couple of pages. UI experts should design each screen with a specific purpose in mind while focusing on simplicity and clarity. Additionally, there shouldn’t be an excessive amount of graphic components (buttons, pop-up windows, charts, etc.) on the user interface.
Once the final design layouts are ready, the visuals are forwarded to your development team. This stage transforms your business idea into a full-fledged crypto solution. Here, developers build the architecture of your crypto wallet, factoring in the scalability and security of your solution.
A production-ready MVP is the result of the stage. Your early version should include only core features, such as authorization, generation of a public key, etc.
When your MVP is ready, the Q&A team will run rigorous testing to make sure your app is bug-free. Testing teams act as the first app users and make sure your solution covers the pain points of your target audience.
This is the stage where your crypto wallet is rolled out into the environment. The release environment will depend on the type of a wallet and your business objectives.
The security and stability of your crypto wallet are the two pillars that will ensure your project’s success. Therefore, regular updates and security patches are essential to guarantee both.
The Final Word
The cryptocurrency market is booming, and it is only expected to grow in the coming years. Building a crypto wallet is a smart way to securely store your digital currency and make sure that you are prepared to take advantage of the many opportunities that cryptocurrencies offer. As the market will continue to gain traction, we’ll likely see crypto initiatives picking up even more potential than it has now.