Problems with Crypto Wallets and How to Overcome Them
Updated: Nov 8, 2021
People are realizing the benefits of crypto assets and their promising future. It has all become possible because of its decentralized, safe, secure, and tamper-resistant transactions. With the increase in the number of crypto traders, the need for crypto wallets is also increasing.
It is not only bitcoin that is revolutionizing the market but other cryptocurrencies like ether, ripple, bitcoin cash, litecoin, and tether are also creating a significant impact on the global crypto market.
Indeed, it has also become paramount to keep the funds safe and this can be achieved by having an in-depth knowledge of security and storage attributes. Therefore, firstly, let us discuss various types of cryptocurrency wallets available in the market.
Types of cryptocurrency wallets
If you are planning for Bitcoin wallet development or want to build a multi-currency wallet, you need to decide the type of wallet you want to build, in the first place. Below mentioned are the types of crypto wallets:
Desktop Wallets: These are the wallets that can be easily downloaded onto your computer screen and then the trade can be executed. It offers full control over the assets.
Web Wallets: This wallet can be accessed without even downloading or installing the wallet on your phone or desktop. These wallets also offer an option to manage the private keys of users on their behalf.
Mobile Wallets: Mobile wallets are more or less similar to desktop wallets. You just need to download this wallet and it is quite handy to use. Mobile wallets offer easy access to crypto funds.
Hardware Wallets: These are the physical wallets that store cryptocurrencies in the offline mode. They are similar to a pen drive and are easy to carry.
Paper Wallets: In this, the private key and crypto address are printed on a piece of paper. They remain safe from any form of malware and hacking.
Major cryptocurrency wallet problems and their solutions
Digital wallets have been an integral part of the global market for a long time. It has also been analyzed in a JP Morgan survey conducted in the USA that more merchants are favoring digital payments as compared to the customers. Customers wary from security risk and thus the adoption has remained a slower process. But gradually, consumers are switching to digital payments – cryptocurrency in particular.
Let us further have a look at various problems and how careful bitcoin wallet development is resolving these issues:
Security always remains paramount while designing a cryptocurrency wallet. The safety level varies from one cryptocurrency wallet to another and crypto users who are unaware of this fact often settle for a less secure crypto wallet. There was news that crypto wallets are getting hacked and the funds are transferred to malicious accounts, and anonymity is making it impossible to track crypto funds.
Solution: Before finally choosing a crypto wallet for regular use or development, you must make sure to integrate advanced security features into it. Hot wallets are comparatively more prone to hacking so you should follow a more secure mechanism to get a hold on them.
One of the best mechanisms is to use an escrow service system. In this, the seller deposits the assets in the escrow account and meanwhile, the borrower transacts the money in return. And finally, the assets are released from the escrow account.
Cryptocurrencies are volatile and their price keeps on fluctuating. The price of bitcoin reached an approximate maximum value of $20,000 in the year 2017 but it also saw a downfall in the same year. Thus prevents the mass adoption of cryptocurrency and the industry is viewing it as a challenge to make cryptocurrency a regular investment option.
Solution: To combat the issue of price volatility, token or coin should be devised keeping in mind the economics of its very existence. It should be designed on a strong fundamental basis and be able to provide real value to the users. It is backing around a real utility infuses the level of confidence in the minds of traders. A complete package token does not only require liquidity but also the flexibility to update changes over time.
Reliability of the cryptocurrency wallet
One of the major issues faced by the wallet is reliability and trustworthiness. Users are not able to ascertain which wallet to choose and further we will consider the points on some common problems and how to address them.
Recover your wallet: Suppose you are using a mobile crypto wallet and you lose your mobile phone and also your private key. Even in that case, you need not worry as what you simply require is installing the wallet on your new device and recovering the wallet using mnemonics. Mnemonics is a 12, 18 or 24-word phrase that is connected directly to the private keys. It acts as an alternative or decryption key in the event of loss of the private key. It offers a quick and easy backup.
Authentication of valid transactions: Nowadays, there are increased cases of hacking of funds from crypto wallets. Therefore, to maintain the safety of funds, multi signature bitcoin wallet is the best option for you. It provides an additional layer of security to cryptocurrency transactions and ensures that the transaction is fully executed only when all the required parties sign the transaction.
Validity of a genuine user: As hot crypto wallets are much in demand, the safety of funds should also be increased simultaneously. Thus features like two-factor authentication, biometric authentication, password-protected access, and others should be integrated into the wallet.
With all the above-mentioned points, we are sure that now you will have a smooth bitcoin wallet development journey. Security is an utmost priority and you should provide the safest wallet for your users to hold their assets.
At Antier Solutions, we provide a feature-rich white label cryptocurrency wallet that supports multiple currencies. Additionally, we specialize in building a custom crypto wallet from scratch, as per your business requirements.
Schedule a free demo of our white label crypto wallet, or get in touch with our subject matter experts to share your requirements for a custom wallet built from ground zero.
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