Cryptocurrency is a way by which transactions can be made digitally. Quite literally, cryptocurrency is the combination of monetary transactions and cryptography. By combining the two, people are now able to exchange finances and transfer assets online. How do you ensure that your transactions are both secure and accessible? That’s where cryptocurrency wallets come into play. Cryptocurrency wallets are a very important part of the rise in popularity surrounding cryptocurrency.
What is Cryptocurrency?
As physical currency is subject to inflation and devaluation, a need arises for a form of currency that can consistently hold its value, no matter the circumstances. Cryptocurrencies, like Bitcoin in particular, have a mathematically finite amount of maximum currency, making it in limited supply. Currency being in limited supply means that more of it cannot be instantly made, where as paper cash can simply be printed, and therefore instills some level of consistent value in the currency.
Cryptocurrency is a digital form of currency that is decentralized and kept secure through encryptions. Decentralized currency refers to currency that is not being managed, monitored, or tracked by corporations or the government, in particular.
A cryptocurrency user should have a wallet developed for them so that they can access keys, which then allows users to access their cryptocurrency. Essentially, cryptocurrency wallets allow users to manage their cryptocurrency while also adding a layer of security.
: What Are They Used For?
A cryptocurrency wallet is not as similar to a physical wallet as you may think. Instead, a cryptocurrency wallet is a software program that contains keys which are then used to access cryptocurrencies. These keys also allows users to trade cryptocurrency with other users. These transactions are kept on something called a blockchain, which is a chain of data blocks that result when a transaction has occurred. The wallet will never contain any actual currency, but will instead allow access to keys as well as the blockchain.
The development of a cryptocurrency wallet begins by selecting a particular format for the wallet. There are five different formats to choose from:
Desktop Wallets – installed directly on a computer and can only be accessed through that computer.
Online Wallets – can be accessed anywhere.
Mobile Wallets – accessed through a phone application and can be used anywhere with internet access.
Hardware Wallets – physically stored on hardware devices and are not accessible online.
Paper Wallets – accessed through a software that prints out a key on paper.
Each wallet has a different method of accessing stored cryptocurrency. As a result, the formats all vary in the level of security they provide. Knowing how secure you want your cryptocurrency to be will aid you in selecting the best format for your cryptocurrency wallet.
Things To Consider When Developing a Cryptocurrency Wallet
Understanding what type of cryptocurrency a user will trade with and how it will be used is important for determining which type of wallet to choose. Bitcoin, Ethereum, and Ripple are a few of the most commonly traded cryptocurrencies, but there are several that are in use. When having a wallet developed, it must be compatible with the cryptocurrency being traded. A user can also have a wallet set up for one cryptocurrency or multiple if they so choose.
How often and where a user needs to access their cryptocurrency wallet are crucial in determining wallet type. If a user wishes to complete several transactions, they might opt for a more accessible option like a mobile or online wallet. If they are more interested in keeping funds secure and less in trading, a user could pick a hardware or paper wallet that is more physical and can’t be accessed via the internet.
After having chosen a wallet format, a user must find a service to develop the wallet for them. Ultimately, the development of a cryptocurrency wallet is the creation and maintenance of the software used to manage an individual user’s unique keys for accessing their cryptocurrencies. The actual creation of the wallet would be done by developers specializing in blockchain, as that is the data format being interacted with when cryptocurrency transactions take place. Without a cryptocurrency wallet, a user would be unable to manage all of their keys and trade in one location.
Cryptocurrency wallets differ in functionality and security, so it is important to make sure a proper solution is built for the user. Fortunately, there are many digital companies that currently offer cryptocurrency wallet development. For someone that trades cryptocurrency in much larger volume, the development of a good cryptocurrency wallet becomes even more important. With the higher amount of transactions and value traded, there becomes more risk for theft. Having a well developed wallet with strong security can help to minimize this.
It can be difficult to balance between accessibility and security. Increasing accessibility makes the wallet more usable, but it also makes it easier for others to access data. Increasing security may include a more physical form of data storage, like a USB drive, which will make it far less likely for theft to occur. This does come at the cost of being able to infrequently access the data, limiting the number of transactions that can happen.
Developing a Cryptocurrency Wallet In Summary
To summarize, cryptocurrency is a decentralized form of currency that can maintain value over time due to its finite nature. For users wishing to trade cryptocurrency, a cryptocurrency wallet should be developed to help manage all of their data. A cryptocurrency wallet is a software solution that provides security, allows a user to store their keys used to access cryptocurrencies, and provides interfacing with the blockchain.
Cryptocurrency wallets come in five main formats; desktop, mobile, online, hardware, and paper based wallets. When having a cryptocurrency wallet developed, a user should consider how, and how often, they plan to trade their currencies. This will determine what style wallet users should have developed, as an increase in accessibility may reduce overall security.