How To Develop A Bitcoin Wallet App

Despite the rather gloomy cryptocurrency market these days, Bitcoin and the other altcoins continue to grow in popularity. Every day new traders join the market hoping to cash in on the next upsurge in price.

Developers are also reaping the benefits as the market grows by leaps and bounds. The first task for a new trader is to set up a Bitcoin wallet. Who creates these wallets? Software developers and development companies of course.

So if you are a developer who is looking to cash in on this new market, you only have one fundamental question to answer – how do you develop a Bitcoin wallet app?

In this article, I aim to give an overview of how you can create your own bitcoin wallet. Keep in mind that if you are not experienced, this process will take some time to get right.

We strongly advise that you make sure your completed app is as close to perfect as possible before launch as if it contains bugs, it is going to quickly get a reputation as one to avoid.

Contents

What is a Bitcoin Wallet?
Planning is the key to success – Know what you need to do before you do it.
How to build your own Bitcoin wallet app using popular libraries
Develop a Bitcoin wallet app from scratch
The Easy Route: Integrate ready-made payment services, or develop a Bitcoin wallet app?
My Final Thoughts

What is a Bitcoin Wallet?

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Bitcoin wallets aren’t something that you carry physical cash in as cryptocurrencies are digital currencies that don’t exist in physical form. Rather they only exist as a series of transaction records stored on a blockchain.

Cryptocurrency wallets are in essence a piece of software where users can store their private keys and records of their transactions including how many coins they own.

Most of the cryptocurrency wallets support Bitcoin and Ether, the two most popular digital currencies. However, with increasing number of altcoins, many wallets now support multiple cryptocurrencies.

These wallets are of the following different types:

  • Software: These can be of the following types:
    • Desktop apps that provide a high level of security (since the wallet can be operated only from the computer it’s installed in)
    • Online wallets are web-based and stored in the cloud (These do run a greater risk of hackers getting control of it)
    • Mobile wallets that are simplified versions of the online wallets (Higher risk of being compromised)
  • Hardware: These hardware-based wallets offer the highest security (unless you are someone who has a habit of losing their possessions) because the data is stored on a hardware device such as a USB drive meaning coins are held offline.
  • Paper: These are simply print-outs of the private and public keys, and if the paper is lost so are the funds! (Most risky option)

For more on these types of wallets in detail you can read this article.

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Planning is the key to success – Know what you need to do before you do it.

Before making a Bitcoin wallet, any aspiring crypto developer needs to know exactly what the app needs to do. Here is a list of the main things a cryptocurrency wallet must do:

  1. It must generate the required Bitcoin blockchain addresses.
  2. The wallet needs to recognize transactions and be able to send funds to the above-mentioned addresses.
  3. At the other end of the spectrum, the wallet needs to recognize and process Bitcoin transactions being received from other addresses.
  4. The wallet must store the transaction history, and be able to show it when needed. Remember, Bitcoins are basically just digital transaction histories.
  5. The wallet needs to be able to handle the impacts of the Bitcoin blockchain database reorgs and other conflict resolution actions undertaken by the Bitcoin community.
  6. Bitcoin transaction fees vary, based on several factors. The wallet should be able to dynamically calculate the fees based on the latest rates.
  7. Must be able to build and sign Bitcoin transactions.
  8. Upon completion of the transaction, the wallet needs to broadcast the transaction to the Bitcoin blockchain.

Creating a Bitcoin wallet will require a set of good programmers. As I said in the introduction, bad code will lead to failure. If you are not sure that your development team have the necessary skills or background to code a great bitcoin wallet app then we recommend considering outsourcing the jobs you are not sure about.

That said, there are various tools and libraries available to help developers. These include full node, pruned node, and various application programming interfaces (APIs), which I will briefly touch upon.

Additionally, a developer unfamiliar with blockchain technology should definitely spend the time to fully understand it. Many of the libraries and tools mentioned below presuppose a reasonable amount of knowledge on this subject. If you need to brush up on blockchain then a good starting point is this blockgeeks article.

The Bitcoin protocol has its own unique characteristics. For developers planning to code a Bitcoin wallet from scratch, a range of skillsets are essential that relate to blockchain technology.

Developers need to understand the importance of cryptographic hash function, the need for a decentralized protocol, how to prevent the problem of ‘double-spend’, ‘proof of work’ (POW) consensus algorithm, and public and private key cryptography.

To gain the necessary familiarity with these concepts, we recommend this article by Michael Nielsen, as a starting point.

How to build your own Bitcoin wallet app using popular libraries

 

One way to create a Bitcoin wallet app is rely heavily on existing tools.

There are loads of free libraries and tools to help developers. The most important of which are the ones that synchronize the wallet app with the blockchain to make the transaction process easier.

Coinbase Software Development Kit (SDK):

The digital currency exchange Coinbase has an SDK to help developers build a cryptocurrency wallet app. This cross-platform Java library can be used for Python and Ruby also.

The SDK allows users to use Bitcoin to purchase other currencies, has a good transaction management capability, and supports crypto payments. Coinbase SDK supports development for the iOS and Android platforms and has a very good guide for cryptocurrency wallet app development.

There is a registration process for the developer to follow, and some features may not be available in every country.

BitcoinJ SDK:

If you are a Java developer, this SDK is a good choice to build your own wallet app. It’s a cross-platform library, and can also be used from Java Virtual Machine (JVM)-compatible languages such as C++, JavaScript, Ruby, and Python.

The BitcoinJ SDK has the following capabilities:

  • It allows the developer to create a Bitcoin wallet app with password encryption.
  • Works with existing wallets.
  • Makes sending, receiving Bitcoin and checking balance easy.
  • The developer can work with TestNet3, i.e. the official Bitcoin test network, and MainNet, i.e. the main Bitcoin network.
  • Both Windows and Android wallets can be created.

A significant advantage of this SDK is that the wallet is created in the users’ device, and the developer doesn’t need to store her private key anywhere else. There is no registration required, and the quality of documentation is very good.

Blockchain wallet API:

Blockchain Luxemburg Ltd. has arguably the most popular Bitcoin wallets. A developer can create a Bitcoin wallet app using their application programming interfaces (APIs).

The company provides excellent documentation which is easy to follow. Using this a developer can complete all the necessary steps in a very short time:

  • Installation;
  • Create wallet API:
    • Set a password for the wallet,
    • Configure an API code for managing the permissions in the wallet,
    • Set up a private key,
    • Designate an optional label for the first address in the wallet,
    • Associate an email address with the wallet.
  • Make outgoing payment transactions;
  • Send Bitcoin to multiple recipients;
  • Check wallet balance;
  • List the active addresses;
  • Get the Bitcoin balance of an active address;
  • Generate a new address;
  • Archive or unarchive an address.

It supports all prominent platforms – Windows, MacOS, Linux, iOS, and Android. All major programming languages are also supported, including Java, Python, and Ruby.

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The API is free, which is another advantage for developers who are on tight budgets or planning any other blockchain wallet development or Bitcoin application projects.

Develop a Bitcoin wallet app from scratch

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There are times when a developer may opt to create a Bitcoin wallet from scratch without using any existing libraries.

Such a decision may be down to specific requirements for the app or the limitations of existing libraries.

To code a cryptocurrency wallet app development project from scratch requires significant programming skills, and the developer is likely to stumble onto several issues. We recommend reading this helpful article before the starting the project. It should help first time developers avoid many of these traps.

A difference in with this approach is that the developer needs to address the following:

  • Synchronization of the blockchain network by installing the required APIs or tools;
  • Creating the Bitcoin wallet app, including all the necessary programming;
  • Develop the program to adjust permissions for outgoing and incoming transactions;
  • Writing, testing, and implementing standard programs for the commonly used transaction process steps, for e.g. checking the wallet balance.

First step – Build a great development team

Since there are quite a range of diverse skills required, a good development team will need people with the following skills:

  • UX/UI designers, who will build the user interface of the wallet;
  • Mobile and backend developers, to work on the main app as well as the mobile version;
  • QA specialists to thoroughly test the Bitcoin wallet app.

We recommend that the development team install a full node of the Bitcoin blockchain for this project.

While other approaches can be used, for e.g. pruned node, full SPV node, or SPV node, using a full node is generally the most recommended one.

The development team can do this using Bitcoin Core’s RPC, i.e. ‘remote procedure call’. We recommend using NBitcoin for this. The team should first fully synchronize the node, and the subsequent operations can be done using the RPC commands.

The ‘initial blockchain downloading’ (IBD) can take more than a day. After it’s complete, the team should start ‘bitcoind’, i.e. the program that implements the Bitcoin protocol for RPC calls.

Here is a good guideline to help developers learn the necessary commands to manage the wallet in a full node. Simply click this link and you can read it in full here.

This approach has a few distinct advantages, namely the following:

  • This is one of the oldest approaches and has been tested by many Bitcoin developers.
  • While not an everyday occurrence, a fork of the Bitcoin network may happen to generate a lot of debate in the community. Using a full node gives any developer the ability to decide which version of the Bitcoin blockchain they want to use should a folk occur.
  • There is good documentation available.

There are also some disadvantages, for e.g.:

  • For someone unfamiliar with the Bitcoin Core, the APIs may appear less user-friendly;
  • IBD is a time-consuming affair, but it’s a must for using a full node;
  • There are limits to the number of transactions the wallet can support;
  • Every wallet addition requires a restart of ‘bitcoind’;
  • Only a limited number of wallets can be created.

Developers can add wallet on top of RPC, or use ‘Bitcoin Knots’, i.e. a Bitcoin Core fork created by another Bitcoin developer named ‘luke-jr’.

This point onwards, developments can proceed as they do in any other app development, for e.g. setting a password for the app, or integrate a QR code scanner and push-notifications in the mobile app.

The Easy Route: Integrate ready-made payment services, or develop a Bitcoin wallet app?

While we have so far discussed how to develop a Bitcoin wallet app using available libraries or by building one wallet from scratch, it’s pertinent to note that for a small business going down either of these routes may not be necessary.

There are ready-made Bitcoin payment solutions that small businesses can just integrate into their app.

Below are a few examples:

  1. Stripe users in the USA can receive Bitcoin payments in USD, following an API integration.
  2. Cryptopay Ltd., a UK-based company, allows a small business owner to add Bitcoin payment option to her website.
  3. Shopify, using which a small business owner can create her personal store, allows Bitcoin as a payment method.
  4. BitPay, the USA-based payment service provider, allows Bitcoin payments, and have mobile solutions for this as well.
  5. BitBay is another service provider that allows Bitcoin payment and has an Android app for this.
  6. Australia-based BitPOS has a payment platform that accepts Bitcoin.
  7. Coinbase Commerce: This is an excellent suite of services! The small business owner needs to create a Coinbase Commerce account, and it’s free. The entrepreneur can accept Bitcoin payment on her website using simple payment buttons and pages. There is also a cool integration with Shopify, and custom integration with Commerce API is also possible. The integration with Shopify is very useful especially for small business owners using shopping carts on their websites. It’s easy to generate the necessary API keys, and there is good documentation
  8. Virtual currency platform Coinify has their ‘Coinify Merchant‘, using which merchants can accept Bitcoin and other cryptocurrency payments on their website. There are easy integration options available for many platforms. The payment process flow is automatic.
  9. Coinkite, the maker of crypto security hardware, offers Bitcoin payment options through their merchant tool and point-of-sale (POS) payment terminals.

My Final Thoughts

As I have said before, building the best possible development team is the key to your project’s success. Be sure to outline all the various skillsets that will be required during the planning phase. With any cryptocurrency wallet, your team is going to need to have blockchain experts at the helm.

While there are many challenges to creating a bitcoin wallet the rewards are enormous for those companies who get it right. While no one knows where the cryptocurrency market will be 10 years from now, what is certain is that a number of the big players like Ripple, Ethereum, and possibly Bitcoin will still need the help of cyptocurrency wallets to allow people to use them.

Getting your Bitcoin wallet up and running will give you a chance to be a big player in this lucrative market.

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Aran Davies

Aran Davies

Blockchain Expert | Developer | Writer | Photographer
Aran Davies