What is a crypto wallet?

Let's start with the concepts. A crypto wallet is a service where users can store cryptocurrency, buy, sell, send, and receive digital assets. All transaction records are automatically saved. A crypto wallet itself is not a store of assets, but provides users with access to cryptocurrency located on the blockchain network. Usually, a crypto wallet is an application that is installed on a smartphone or computer, but it can also be a browser extension or a gadget.

Any transactions related to the transfer of crypto assets are transactions of information, not of the cryptocurrency itself. Participants in a transaction transfer information about the ownership of a certain cryptocurrency to each other.

What about the security of crypto wallets? To protect assets, each wallet uses a security key or a private recovery phrase (seed phrase). To make a transaction, the user uses the public and private keys. For simplicity's sake, let's draw an analogy with a bank. A public key is like a bank account number, it's your wallet address. The user can safely share the wallet address with other people or financial institutions. The private key works like a CVC on the back of a bank card. It is needed to make transactions with assets in the wallet. The private key should be kept in a safe place to avoid hacking the wallet or stealing funds.

Types of Crypto Wallets

The types of wallets differ in several significant ways, such as how easy it is to use, how well it is secured, how many cryptocurrencies it supports, what format it has, and so on. Let's take a look at several types of crypto wallets to understand their features.

By format

Depending on the principle of operation, there are hot (software) and cold (hardware) crypto wallets. Hot wallets are mobile, desktop, and web applications. Cold wallets have a physical form, they are special devices that can be connected to a PC.

Key Management

Wallet developers determine how users' public and private keys are managed and stored. We can distinguish a separate category by the type of data management, divide wallets into two groups: custodial and non-custodial.

Custodial services, such as cryptocurrency exchanges, store public and private keys on their servers. Moreover, backing up data is also the responsibility of the developer. This type includes exchange and some software crypto wallets.

Non-custodial wallets allow the user to store the keys on the device on their own. When creating an account in such a wallet, the user specifies a recovery phrase, so they can access the cryptocurrency even if the keys have been lost. The reality is that storing cryptocurrency in centralized custodial wallets is less secure than non-custodial ones.

By Device Type

The most common crypto wallets are non-custodial, let's take a closer look at their features and types depending on the devices they are used on.

1. Desktop wallets are the most popular type of wallet among users. It is an application that is installed on a PC. All information about the user's cryptocurrency and private keys is stored in the computer's memory, so experts advise taking care of additional protection, such as using two-factor authentication and antivirus. A desktop wallet differs from other software wallets by a high level of protection, so it is actively used in staking.

2. Mobile wallets are an alternative to desktop wallets with advanced functionality. Mobile applications are installed on smartphones. This type of wallet is ideal for daily use, as it provides instant access to assets wherever you are. Experts advise securing your mobile crypto wallet by setting a strong password and backing up your login file.

3. Web wallets are used through a browser, users do not need to install special software. This type of asset storage is not considered reliable, so in order to prevent theft of funds, users install additional protection of the web wallet. Two-factor authentication and anti-phishing encryption are used for this.

4. Paper wallets are an alternative to cold offline wallets. A paper wallet is a piece of paper that contains the keys to the wallet in the form of QR codes. To make a transaction, you need to scan the code. This method of storing crypto assets is very reliable, as fraudsters cannot access the private keys remotely.

5. Hardware wallets look like flash drives. They are considered to be the most secure type of wallet among all the others. Hardware wallets automatically generate private and public keys. They are gadgets that do not have access to the internet. Hardware wallets are suitable for users who prefer long-term investments. Many crypto whales, large crypto investors, choose this type of wallet to store their investments.

At Purrweb, we have developed two mobile crypto apps. Explore our case studies: the Broex crypto wallet and the Asian crypto wallet.

Top 5 Crypto Wallets

Let's take a look at 5 popular cryptocurrency wallets. We have made a selection of both hot and cold wallets. These apps and devices have attracted millions of users around the world, and they can be taken as an example to create your own wallet.

MetaMask 

MetaMask is one of the most popular decentralized cryptocurrency wallets. It is built on the Ethereum blockchain and serves to store, transfer, and receive ERC-20 and ERC-721 tokens. The wallet is convenient for working with decentralized exchanges, smart contracts, and DeFi applications. MetaMask is highly compatible with hardware wallets.

📱 MetaMask Wallet is a Google Chrome extension and mobile app.

🔒 MetaMask supports BNB SmartChain (BSC), Polygon, Harmony, and several other blockchains, as well as about 200,000 ERC-20 or ERC-20 compliant tokens.

Exodus 

The Exodus wallet is a hot wallet where users can buy, sell, and exchange cryptocurrencies. The wallet has a simple and intuitive design, a lot of features, as well as regular automatic software updates. Exodus encrypts private keys and transaction data on the device. It is compatible with the Trezor hardware wallet.

📱 Exodus desktop and mobile apps are available.

🔒 Exodus supports Bitcoin, Ethereum, Litecoin, XRP, and several other blockchains, the ERC-20 token standard, and more than 150 cryptocurrency assets.

Exodus Wallet Home Screen

Trust Wallet

Trust Wallet supports ERC-20, BEP-2, and BEP-20 token standards, NFT tokens, and decentralized applications (DApps). Trust Wallet has a built-in Web-3 browser. Since Trust is created by the Binance crypto exchange, it is compatible with all of the platform's services.

📱 Trust is a mobile wallet app available for iOS and Android.

🔒 Trust Wallet supports more than 40 blockchains, including Bitcoin, Ethereum, Litecoin, Solana, and Polygon, as well as 4.5 million crypto assets.

Ledger Nano

There are two types of Ledger cold wallets: Nano X and Nano S.

The Ledger Nano X is a device that can be connected to a smartphone via Bluetooth or to a PC via USB. This hardware multi-currency storage is popular with long-term investors.

The Ledger Nano S is slightly cheaper than the Nano X and doesn't support Bluetooth, but it still offers a high degree of security. While this model isn't new anymore — it was released in 2016 — the Nano S is one of the most popular hardware wallets out there.

📱 Users can manage their digital assets using the Ledger Live desktop and mobile app, available for iOS and Android.

🔒 Ledger supports more than 5500 cryptocurrencies and tokens.

Trezor Model T

Trezor is a cold hardware wallet, one of the most popular devices on the market. The wallet provides an isolated environment for signing cryptocurrency transactions offline. Trezor is equipped with a touch screen and has a user-friendly interface that makes it easy to use the wallet. You can send transactions to multiple recipients at once and use universal two-factor authentication to protect your assets.

📱 Trezor is compatible with Ethereum-based web and desktop wallets.

🔒 The Trezor Model T can store more than 1800 different cryptocurrencies and tokens.

Why is there a demand for new cryptocurrency wallets?

Over the past few years, we have witnessed the explosive growth of the cryptocurrency market. Total Market Capitalization peaked in 2021 and continues to amaze traders and investors. The involvement of both companies and ordinary users in the crypto market is increasing, which means that more and more people in the world are gaining access to this financial instrument. As a result, there is a growing demand for high-quality and highly secure solutions for storing crypto assets. According to ZionMarketResearch The crypto wallet market is expected to grow to $686 million in the next 6 years.

A crypto wallet solves users' current problems, such as unreliable storage of tokens on exchanges and complex transaction and conversion procedures. In a high-quality cryptocurrency wallet app, tokens are transferred from one address to another and converted in just a couple of clicks. The internal security protocol is responsible for the safety of funds, and private keys and strong passwords that only the user has access to create an additional layer of protection.

From a developer's point of view, it is profitable to create applications because you can earn on commissions for transfers, currency conversions, and advertising. Given the demand in the market, the idea of creating your own cryptocurrency wallet looks promising today.

Must-Have Features of a Crypto Wallet

What Features Should a Cryptocurrency Wallet App Have? First of all, a wallet is needed in order to avoid problems associated with trading and storing funds on a crypto exchange or marketplace, and to increase the security of assets. Based on this, the main features of the app are:

Unique access key. Each wallet provides its users with a unique public and private key. It should have the option to add your password or two-factor authentication.

Limited session duration. For security reasons, you need to limit the duration of the session. This practice exists in banking applications. When some time passes without user activity, the app automatically closes. To resume the session, you must log in again and enter your password.

Multiple supported cryptocurrencies. There are single-currency crypto wallets, such as Bitcoin wallet or Ethereum wallet, but right now their popularity is not as high as that of multi-currency alternatives. Investors and traders are often more comfortable with having a diversified portfolio of assets and keeping everything in one place. The most sought-after crypto wallets are constantly adding new tokens to the list of available ones due to the growing demand from the crypto community.

Buying and selling cryptocurrencies. The crypto wallet app opens access to the purchase and sale of cryptocurrency assets, allows you to execute buy and sell orders, and organize transactions between users.

Transactions to another wallet. An integral part of the crypto wallet application is the ability to send cryptocurrency to another wallet using its number (public key). In this way, cryptocurrencies are transferred from one user to another.

QR code. QR codes make it easy to complete a transaction, receive an asset transfer to your address, log in to a crypto wallet app, securely authorize a user on the platform, or confirm any other actions.

Push notifications. Notifications can contain one-time codes to confirm transactions, as well as information about the successful crediting or debiting of assets, or an error. Push notifications are important for security. If any assets have been debited from the account without the user's consent, they will immediately know about it from the notification.

Constant updating of the exchange rate.Due to the high volatility of crypto assets, the exchange rate is constantly changing. Crypto wallets allow users to transfer money in a variety of ways, such as bitcoin or altcoins. The application must be synchronized with the blockchain and display up-to-date information about exchange rates at the time of the transaction.

Compatible with iOS and Android. For a larger audience reach, run the app simultaneously on popular operating systems: iOS and Android. You can do this with React Native, which is a framework that helps developers use the same codebase to develop two apps.

Additional Crypto Wallet Features

You can stand out from the competition by adding additional features to your wallet beyond the main ones.

Calculation of commission. Some crypto wallets have a fee calculation field that automatically shows how much the user needs to pay depending on the amount of the transaction. This feature makes the system more transparent and user-friendly.

Convert fiat currencies to cryptocurrency. Not all wallets allow you to convert fiat currencies to cryptocurrencies. However, such a feature can add popularity to your wallet and will be of interest to newcomers to the crypto world.

Payment gateways.A cryptocurrency payment gateway is a tool that allows users to pay with cryptocurrency for goods and services, and merchants to accept crypto payments. In turn, advanced cryptocurrency payment providers offer to automatically convert assets into fiat currencies.

Cooperation with cryptocurrency exchanges. Many wallets need to be connected to the web version of a decentralized exchange or NFT marketplace in order to buy and sell assets on these platforms. Simplified or automatic connection to popular exchangers will be a great addition to your service.

Multiple accounts for cryptocurrencies. To diversify a portfolio, investors and traders buy and hold several different cryptocurrencies at the same time. You can add the ability to create multiple accounts for different currencies to your crypto wallet app. This will create a clear separation between assets, which will simplify financial management.

Staking. Many platforms, including Binance and Coinbase, have added the ability to stake crypto with a crypto wallet. Storing cryptocurrencies to maintain the performance of the network and getting rewarded for doing so is a popular passive income among crypto enthusiasts.

Technologies for the development of a crypto wallet

To develop a crypto wallet app, you need to choose its type: desktop, web, or mobile application. Let's take a look at the useful technologies that are used in the development of different types of applications.

Electron.js for desktop applications. Electron.js allows developers to build cross-platform desktop applications using JavaScript, HTML, and CSS. This open-source framework uses Chromium and Node.js. Electron.js-based apps are compatible with Mac, Windows, and Linux .

React.js and Node.js for web applications. React.js and Node.js are open-source JavaScript libraries for web applications. React is a popular library for creating interactive user interfaces. React provides access to a set of convenient tools and is regularly updated. Node.js is a server-side development environment. With its help, specialists create scalable web applications with high performance, flexibility, and interoperability.

React Native for mobile apps.React Native is a framework used to create mobile apps for iOS and Android. It helps to develop applications for two platforms using a single codebase. Built on top of React.js, React Native allows developers to use a set of UI components to quickly compile and launch mobile apps. It is updated in real-time and attracts developers with an intuitive and user-friendly interface.

Most professionals agree that these technologies are the best choice for app development. The Purrweb team is no exception, so we build desktop apps using Electron.js, web apps using React.js and Node.js, and choose React Native when building mobile apps.