A cryptocurrency wallet is an electronic wallet used to store digital currency. The user can interact with the blockchain and perform transactions with Bitcoin, Ethereum, Ripple, and other cryptos with this device.
But above all, the cryptocurrency wallet allows you to keep the digital currency safe through a system of keys and cryptography. It is a fundamental element for the storage of any cryptocurrency, without which you would not be able to buy Bitcoin, Ethereum, and the like.
Once you’ve purchased cryptocurrency, the next step is to decide and make sure whether to choose a custodial wallet or a non-custodial wallet to store your funds?
Wallet services in which a third party keeps the hold of your private keys. Meaning the third party has full custody of your funds. Custodial wallets have certain benefits, such as less responsibility regarding private key management. Once the third party gets a hold of your private key, the user is no longer responsible for protecting the private key and therefore places trust in the business keeping it safe for them.
Wallet services in which you are your own bank. The user has full control over their funds and the associated private key. However, the user must remember that if they lose the private key, the coins in the wallet are lost forever. The user needs to manage the wallet, this includes backing it up and adhering to password management best practices.
Cryptocurrency Wallet Development can be physical or virtual depending on the type you purchase, in hardware or software format. You will see what the differences are. For the moment, you say that:
- Software wallets are online platforms that can be reached with an internet connection;
- Hardware wallets are USB sticks where you can keep Bitcoins offline.
Types of crypto wallets
A wallet is a combination of a public address and a private key. The different types of wallets are below:
A hot wallet is an online vault you can access your funds or trade on the go. It provides a secure way to store cryptocurrencies online. Hot wallets are easy to set up, and the funds are quickly accessible. Traders conveniently use them.
It involves downloading an application to your desktop or laptop. The application will help generate a data file for holding the private keys for the user.
You can access a web wallet through the web browser without downloading any specialized software or application.
This functions similar to a desktop wallet. You have to install a mobile application, which would serve as a hot wallet.
Cold wallets are offline vaults and do not require internet connectivity. Cold wallets are hack-resistant and, thus, more secure cryptocurrency storage solutions. You only connect a cold wallet to the internet when you want to make a transaction.
Types of cold wallet
Paper wallets are nothing but physical pieces of paper. The paper must store all the data regarding your cryptocurrency.
Hardware wallets offer a physical device in an offline environment and work just like the USB.
Cryptocurrency wallet: how it works
Cryptocurrency wallet development allows you to communicate with the blockchain by sending and receiving virtual currency tokens without going too far into technicalities.
In truth, Bitcoin and other cryptocurrencies never leave the blockchain but move from one side to the other. Each wallet has a public address, i.e., an alphanumeric code that identifies a position on the blockchain. When you need to cash in cryptocurrency or buy some on cryptocurrency exchanges, you communicate your address, and you will receive the sum you are entitled to there. Therefore, a cryptocurrency wallet does not contain Bitcoin, Ethereum, Monero, or similar. It is more of a tool for interacting with the blockchain and moving tokens.
To ensure maximum security, each crypto wallet is equipped with a pair of keys, one public and one private: the first is used to interact with the counterpart (e.g., for a Bitcoin transaction). In contrast, the second is used to access your cryptocurrency wallet from any device.
Do you want a white label cryptocurrency wallet that allows you to focus only on buying and selling or trading Bitcoin? The best solution, in this case, is to rely on online wallets.
This wallet category is inclusive and is divided into three segments:
- Mobile wallet, Smartphone apps (Android or iOS);
- Desktop wallet, software to download on PC (Windows, Linux, or iOS);
- Web wallet, online platforms that can be reached by connecting to the internet.
Cryptocurrency wallet – conclusion
Anyone who invests in cryptocurrencies needs a wallet to hold them. Wallets are often offered by the same platforms that allow the exchange of Bitcoins. If you prefer to keep your savings in cryptocurrencies, it would be advisable to keep them more secure and offline. This is possible with USB wallets, like pen drives dedicated to holding cryptocurrencies.
In all other cases, i.e., when you want to sell or send crypto in a simpler and faster way, digital wallet app development companies, such as those of eToro or Binance, are acceptable. To open a cryptocurrency wallet, you need very little data, and many platforms have streamlined the authentication procedure to the maximum. This allows you to register and buy cryptocurrencies in minutes. In this article, you have seen some suppliers and created tables to help you choose the exemplary service.