Cryptocurrency Software Wallet Methodology
The Methodology Behind Our Evaluations of Cryptocurrency Software Wallets
Before you engage in cryptocurrency transactions or keep any of it, ensuring that you have a secure cryptocurrency wallet set up is one of the most essential preparation steps you can take. We undertook an in-depth analysis of the leading cryptocurrency software wallets as a means of assisting you in selecting the wallet that will serve your needs in the most optimal manner.
Our evaluation procedure is centered on a quantitative rating model that assigns relative priority to several aspects such as the level of protection offered, the price, the level of privacy offered, the ease of use, the availability of customer service, and the features offered. Our team of researchers gathered more than 40 data points and carried out in-depth investigation for each of the 19 businesses that we examined. Our team of writers, all of whom are well-versed in the subject matter, then put each wallet through its paces in order to contribute their qualitative insights.
Our approach gave priority to businesses who had the most stringent safety procedures and the most trustworthy reputations. Companies that provide consumers with a wide variety of services, including support for a big number of crypto assets, the opportunity to sync their accounts with hardware wallets, and the flexibility to customize their transaction fees, ranked very highly.
What Is a Cryptocurrency Wallet, and How Does It Work?
A cryptocurrency wallet allows users to save, send, and receive cryptocurrency in exactly the same way that any other digital wallet does.
It is a piece of software that saves cryptocurrency in a secure location and maintains a record of all of its transactions, including buying, selling, and lending. A cryptocurrency wallet can be downloaded and installed on a user’s smartphone or any other device that is compatible in a simple and quick manner.
The following is an explanation of how cryptocurrency wallets work:
To engage in financial transactions involving cryptocurrencies, you require two pieces of information: first, your wallet address, which is sometimes referred to as your public key, and second, your private key.
A public key can be thought of as being analogous to the number of your bank account. It is possible to allow other persons or institutions access to your bank account number so that they may transfer or receive money on your behalf. To receive the cryptocurrency, you can do the same thing by sharing your public key, which is the address of your wallet.
The private key to your cryptocurrency wallet is similar to the password to your bank account or the personal identification number associated with your debit card in that it is kept secret. You shouldn’t reveal your personal identification number, or PIN, to just anybody because doing so would grant that person immediate access to your bank account.
Your cryptocurrency can only be accessed via a private key, which functions like a password.
Whenever you want to acquire cryptocurrency, whether it be through purchasing it or receiving it as a gift, you will need to direct the person sending you the cryptocurrency to a one-of-a-kind cryptographic address that has been issued by your wallet.
Therefore, your cryptocurrency does not physically exist within the wallet that you use to store it; rather, it exists on the distributed ledger known as the blockchain. Your bitcoin ownership stake can be thought of as the information connected to your public and private keys, which are kept safe within your cryptocurrency wallet due to the fact that cryptocurrencies do not exist in any physical form.
You will be able to transmit and receive bitcoin with the help of both of these keys, and the security of your private key will be preserved throughout the process.
The Method of Evaluation
We developed a comprehensive ranking methodology that is based on a variety of factors that are crucial in evaluating the safety and effectiveness of these products in order to provide the best information possible to consumers who are looking for a cryptocurrency software wallet. This was done in order to provide the best information possible to consumers.
We created a quantitative methodology that ranks each company based on 6 primary categories and 37 attributes by integrating information on the industry, subject matter expertise, and input from consumer surveys. Our approach of scoring was a dynamic scoring methodology. For example, under certain circumstances, binary scores were either given a 0 for the lowest conceivable score or a 1 for the best possible score. Both of these values were based on the same number. The range of the original number was rescaled so that the least value is 0.000 and the maximum value is 1.000. This was done in other circumstances as well where the score was continuous.
Gathering of Information
We went through a process that included online data collection, as well as direct company phone and email contact, in order to compile in-depth information on 19 popular cryptocurrency software wallet companies. This process covered a total of 26 scoring criteria, and it resulted in the collection of 570 data points. In addition, we polled 926 prospective customers that are interested in purchasing a cryptocurrency wallet in the near or distant future.
The following category weights were determined by us on the basis of the findings of consumer surveys as well as our in-depth knowledge of the subject matter:
• Safety and Assurance (28.43%)
• Cost (12.50%)
• Confidentiality and Complete Anonymity (17.63%)
• Usability (10.50%)
• Assistance with Customers (11.76%)
• Special Considerations (19.18%)
In order to facilitate an accurate comparison of businesses, our grading rubric includes the following six categories and 26 aspects:
Security
• Method of Account Access (5.73% of the total)
• Method of Transaction Authorization (4.79% of the total)
• The Recovery Method (5.01% of the total)
• One’s Reputation (5.52% of Total)
• Deterministic Hierarchy (3.23% of the total)
• Open Source Code (3.97%)
Expenses & Charges
• One-Time Fee for Each Device or Account (2.08%)
• Fee to Send (ongoing, recurring) (2.08%)
• You Will Be Charged a (Recurring) Fee of 2.08%
• A customizable fee of 6.25 percent
Confidentiality and anonymity
• KYC (3.96%)
• Method for Anonymizing Transactions (4.96%)
• CoinJoin-Capable (4.05% of the total)
• New Address Produced (4.66% of Total)
Usability
• Suitable for Compatibility with Hardware (4.90%)
• Support for many platforms (5.60%)
Assistance to Customers
• Support for Customers Around the Clock (7.74%)
• The total number of available support channels (4.01%).
Features
• The total number of currencies accepted (2.67 percent)
• There is Access to Fiat Funding (2.10%)
• How often new content is added (2.18%)
• Receive interest on cryptocurrency holdings at a rate of 2.82%
• Staking Option (2.19%)
• Able to Purchase Cryptocurrency (2.8%)
• Able to Sell Cryptocurrency (2.41%)
• Capable of Crypto-to-Crypto Swaps, Exchanges, and Conversions (1.95%)
Security
Several distinct implementations of wallet software are currently available. Users have the option of accessing their wallets via the cryptocurrency exchanges that are used to purchase coins, downloading a software program to their desktop computer, or even via an app on their mobile device. “Hot wallets” are another name for software wallets, and they get their name from the fact that all of these alternatives leave a user’s public and private keys linked to the Internet. While compared to hardware wallets, which offer “cold” storage of cryptocurrency assets by storing them offline, the chance of having a user’s funds stolen is far higher when using software wallets.
Within the context of our evaluation, the entirety of this section is responsible for 28.43% of the total weighted score.
Access Method for the Account
While we were investigating the several ways in which each wallet can be accessed, we thought about whether or not multiple types of authentication (also known as MFA) are needed in order to access user accounts.
The score of 1 was given to wallets that required MFA, whereas the score of 0 was given to wallets that did not require multiple forms of verification. This rating accounts for 5.73 percent of the total stars that we have assigned.
Method for the Authorization of Transactions
In addition, we investigated the security-related steps that must be taken before transactions may be authorized when transmitting from each wallet.
Wallets that required multiple users’ signatures were given a score of 1, whereas wallets that did not require multiple users’ signatures were given a score of 0. These ratings account for 4.97 percent of the total stars we have assigned.
The Method of Recovery
The recovery phrase is an essential component that must be present in order to guarantee the safety of a cryptocurrency wallet. In the event that you are unable to access your account for any reason, a seed phrase will become an essential component in the process of recovering your wallet and ensuring its safety.
Wallets that offer their customers the ability to generate a seed phrase are given a score of one, whereas wallets that do not provide users with the ability to generate a seed phrase are given a score of zero. This rating accounts for 5.01% of our total star ratings for the product.
Reputation
When it comes to bitcoin wallets, reputation is important in the same way that it is important in any other field where the safety of assets is the primary concern. Because of this, the researchers on our team dug deep to investigate the number of potential security breaches, hacks, and other types of attacks that each of the companies we looked into may have suffered based on news items published in the preceding 5 years.
As opposed to using a binary scale that ranges from 0 to 1, we rated this item using a continuous scale that goes from 0 to 1,000. After that, we used inverted scoring, which meant that businesses that had committed a significant number of security lapses received a poor score, while businesses that had committed the fewest lapses received a high score. This rating accounts for 5.52% of our total star ratings for the product.
Deterministic Hierarchical Hierarchy
When it comes to ensuring that your wallet is secure from being compromised by hackers, hierarchical deterministic wallets provide an additional line of security. As a result of this, wallets that utilize hierarchical deterministic methods were awarded a score of 1, whereas wallets that did not utilize hierarchical deterministic procedures were awarded a score of 0. This rating accounts for 3.23% of the total stars that we have awarded.
Free and Public Source Code
Wallets that use open source software have their source code published for others to examine and comment on. Open source wallets encourage community participation, build confidence, and provide liberal licensing so that programmers are able to inspect and modify the source code in an effort to improve the wallet and fix any flaws that may be present. To summarize, open source wallets provide an increased level of transparency.
Wallets that did not have open source code were given a score of zero, while those that did had a score of one for having code that was open and reviewable. This rating accounts for 3.97 percent of the total stars that we have assigned.
Features
When you are searching for the cryptocurrency software wallet that is ideal for you, you will want to make sure that the wallet you choose has all of the features that you require.
Within the context of our evaluation, the entirety of this section contributes 19.18% of the total weighted score.
The total number of currencies that can be used.
The quantity of different cryptocurrencies that are supported can be of utmost significance for crypto aficionados with extensive experience. On the other hand, individuals who are just beginning out with cryptocurrencies or who use it on a less frequent basis might not require access to a diverse portfolio of digital assets.
Wallets that only supported a single cryptocurrency were given a score of zero, whereas those that supported two or more cryptocurrencies each received a score of one. This score accounts for 2.67% of the total. The Availability of Fiat Funding
The term “fiat money” refers to a currency that is issued by the government but is not backed by a tangible asset such as gold. Methods such as wire transfers and bank wire transfers, ACH, Apple Pay, Google Pay, credit cards, and debit cards can all be used to fund cryptocurrency wallets with fiat currency.
our overall star ratings.
The Availability of Fiat Funding
The term “fiat money” refers to a currency that is issued by the government but is not backed by a tangible asset such as gold. Methods such as wire transfers and bank wire transfers, ACH, Apple Pay, Google Pay, credit cards, and debit cards can all be used to fund cryptocurrency wallets with fiat currency.
When we were looking at the different ways that people could put money into their wallets, we awarded wallets that had fiat funding methods available a score of 1, whereas wallets that didn’t have any kind of fiat funding method got a score of 0. This rating accounts for 2.10 percent of the total stars that we have awarded.
How often will content be updated?
In the course of our modeling method, we also took into consideration the regularity with which each wallet’s software was updated.
We assigned wallets that got the most frequent updates and repairs a score of 1, while wallets that received updates less frequently earned a score of 0.50, and wallets with update schedules that were not published received a score of 0. This rating accounts for 2.18 percent of the total stars that we have assigned.
Collect Interest on Your Crypto Assets Holdings
A fundamental feature of several cryptocurrency wallets is the possibility for customers to earn interest on their holdings, analogous to the way interest is earned on traditional bank accounts.
A score of one was given to cryptocurrency wallets that allow their users the option to earn interest on their cryptocurrency holdings, while wallets that did not have this feature received a score of zero. This rating accounts for 2.82 percent of the total stars that we have awarded.
Staking Option
Proof-of-stake, also known as POS, is a method that allows owners of a cryptocurrency to confirm block transactions depending on the number of coins a validator stakes. POS, which was developed as an alternative to Proof-of-work (POW), is considered to pose less of a threat to the network in terms of the possibility of an attack being launched against it. Additionally, it provides cryptocurrency owners with an additional opportunity to generate passive income from their holdings.
Wallets that do not allow users to stake their cryptocurrency in order to earn interest were given a score of zero, while wallets that do allow users to stake their cryptocurrency were given a score of one. Wallets that allow users to stake their cryptocurrency earned a score of one. This rating accounts for 2.19 percent of the total stars that we have assigned.
Can Obtain Cryptocurrency
Wallets that allow their users the opportunity to purchase bitcoin were given a score of 1, whereas wallets that did not have this feature were given a score of 0. This score accounts for 2.85 percent of the total stars that we have awarded.
To Sell Cryptocurrency
Wallets that provide their users with the capacity to sell bitcoin were awarded a score of 1, while wallets that do not provide this capability were awarded a score of 0. This score accounts for 2.41 percent of the total stars that we have awarded.
Can engage in crypto-to-crypto trading, exchange, or conversion
Wallets that provide users with the capacity to trade, exchange, or convert one form of cryptocurrency for another were given a score of 1, while wallets that did not provide customers with this capability were given a score of 0. This rating accounts for 1.95 percent of the total stars that we have assigned.
Confidentiality and anonymity
KYC Standards
Know-Your-Customer, also known as KYC, is a security standard that is utilized by some cryptocurrency wallets in an effort to reduce the number of incidents of fraudulent activity and money laundering. Wallets that mandate their customers adhere to these safeguards will often demand their users to divulge some personal information or even produce a copy of a photo identification card issued by the government.
In our assessment, wallets that comply with KYC standards were given a score of 1, whereas wallets that did not comply with KYC criteria were given a score of 0. These ratings contribute 3.96 percent to our overall star total.
Method of Transacting in an Anonymous Manner
The score of 1 was assigned to wallets that enable users to conduct transactions in an anonymous manner, while the score of 0 was assigned to wallets that lack this feature. This score accounts for 4.96% of the total stars that we have awarded.
CoinJoin-Enabled
CoinJoin is an anonymization technique that is only applicable to Bitcoin transactions. It is a multi-party Bitcoin transaction, in which all participants contribute and receive the same amount of Bitcoin; however, the Bitcoin addresses involved in the transaction are mixed up in an effort to make it harder to track the origin of the funds.
Wallets that don’t utilize a CoinJoin anonymization approach were given a score of zero, while those that do were given a score of one. This score accounts for 4.05% of the total stars that we have awarded.
The Generation of a New Address
A Bitcoin address is a long string of alphanumeric characters, much like a bank account number, that identifies where cryptocurrency should be sent. These addresses are used to send and receive bitcoins. When a user makes a new purchase with their wallet, some wallets will generate a new address for them to use. This helps preserve the user’s privacy by preventing a third party from viewing all of the previous purchases made with an account.
Wallets that produce a new address for each transaction were awarded a score of one, whilst wallets that did not have this mechanism were awarded a score of zero. This score accounts for 4.66 percent of the total stars that we have awarded.
Expenses & Charges
Since its inception in 2009, Bitcoin has been at the forefront of the rise in popularity of trading and buying and selling cryptocurrencies. Although the costs associated with transactions might vary greatly depending on which cryptocurrency wallet you use, we were able to locate no cost associated with downloading any of the software wallets that we evaluated.
Within the context of our review, the entirety of this section contributes 12.5% of the total weighted score.
Fee per Device or Account (One-Time Only)
Wallets that may be downloaded without incurring any fees were given a score of 1, whereas wallets that required payment of any kind in order to be created were given a score of 0. This score accounts for 2.08% of the total stars that we have awarded.
Send (ongoing) Fee Payment
Users of cryptocurrencies choose to transmit other cryptocurrencies rather than cash for a variety of reasons, the most important of which are the cryptocurrencies’ anonymity, ease of usage, and absence of any physical borders. No matter which wallet a cryptocurrency owner employs, however, they will always be required to pay a network or mining fee in order to move their assets because this practice has become industry standard. It is essential to note that these fees are paid to the miner for the purpose of processing cryptocurrency transactions and safeguarding the corresponding network, and that they do not go to the company that operates the wallet.
Wallets that ask for fees in addition to those required by the network were given a score of zero, while wallets that ask for fees in addition to those required by the network received a score of one. This score accounts for 2.08% of the total stars that we have awarded.
Receive Payment on a Regular Basis
On the other hand, it is not a generally accepted practice in the cryptocurrency business to charge users of cryptocurrencies network or mining fees when those users are on the receiving end of a transaction. Having said that, there are some wallets that would charge you a fee even for using this service.
Consequently, wallets that do not charge additional fees for receiving bitcoin were awarded a score of 1, whereas wallets that do charge additional fees were awarded a score of 0. This score accounts for 2.08% of the total stars that we have awarded.
Ability to Tailor Prices
You are able to create custom transaction fees using a number of the wallets that are available on the market today.
A score of one was given to wallets that enable users to modify the fees that they are required to pay, whereas wallets that do not offer this capacity received a score of zero. This score accounts for 6.25 percent of the total stars that we have awarded.
Assistance to Customers
It is essential for users of bitcoin wallets to have access to customer service in the event that a problem arises or if there are any concerns pertaining to their accounts.
Within the context of our evaluation, the entirety of this section contributes 11.76% of the total weighted score.
Help for Customers Around the Clock
A score of one was given to wallets that provided customer care around the clock, whereas wallets that did not have this feature were given a score of zero. This rating accounts for 7.74% of our total star ratings for products.
The total number of available support channels
Regarding this significant category, we investigated each organization to see whether or not they provide support through the following crucial channels:
• Help page
• Chat
• Ticket system
• Phone
For the purpose of this function, each wallet is allotted a fractional score. This score is calculated by adding up the various support channels that are accessible to users and then dividing that sum by the total number of channels that are available. For instance, the Electrum, Mycelium, and Wasabi wallets all received a score of 0.20 in this criterion since they only provide support over two of the five different channels that are available. This rating accounts for 4.01% of our total star ratings for the product.
Usability
Compatibility with the Machine Equipment
Because bitcoin software wallets (also known as “hot storage”) are continually linked to the internet, the cash stored in them are more prone to being stolen by malicious actors. Because of this, we gave a score of one to software wallets that are compatible with more secure hardware wallets (“cold” storage), while wallets that do not have this feature were given a score of zero. This score accounts for 4.90% of the total stars that we have awarded.
Cross-Platform
The ability to access one’s wallet from multiple user interfaces (UIs), such as desktop, web, and mobile, is a feature that is very important to a large number of cryptocurrency users, particularly those who trade and transact in cryptocurrencies on a regular basis. This is especially true for users who engage in regular trading and transactions in cryptocurrencies.
Wallets that offer access via any two user interfaces were given a score of 0.67, and wallets that only offered access via one user interface were given a score of 0.33. Platforms that allow users to access their wallet from all three user interfaces were given a score of 1, while wallets that only offered access via one UI access point were given a score of 0.33. This score accounts for 5.60 percent of the total stars that we have awarded.
Looking Around for Some Software Wallets That Support Cryptocurrencies
When searching for the cryptocurrency wallet that is best suited to your requirements, it is a good idea to do some comparison shopping and investigate the various features and levels of security that are offered by companies across the market. We have researched and reviewed 19 of the most reputable firms in order to assist you in locating the software wallet that is most suited to your requirements. Our reviews are intended to answer any questions you may have in order to help you make an educated choice.
There are a variety of uses for cryptocurrency wallets, which are also referred to as “blockchain wallets.” HODLing digital assets is just one of these uses. These wallets also have the capability of storing digital valuables such as NFTs, which you may wish to buy, sell, or trade in the future. They also enable users to transfer digital assets to other users and to other wallets that the user may own, and they enable users to send and receive digital payments between individuals, cryptocurrency exchanges, or digital marketplaces. Lastly, they enable users to store and manage their digital assets.
It should come as no surprise that we placed an emphasis on safety as the primary consideration in our analysis of these businesses given the complexities of virtual currencies. When searching for a software wallet, you will need to take into consideration a number of important elements, including the following: cost, privacy and anonymity, usability, customer support, and functionality. Our reviews delve deeply into each of these aspects. Our advertising and partners do not have any say in the products that we recommend, as is always the case with our reviews.
Various forms of cryptocurrency wallets
Users of cryptocurrency wallets have the freedom to select not only the company or service that will provide them with a cryptocurrency wallet, but also the method through which the wallet will be deployed.
Hot wallets and cold wallets are the two primary varieties of cryptocurrency wallets that can store digital assets. Cold wallets are often offline and only connect to the internet when absolutely necessary, in contrast to hot wallets, which are typically continuously on and linked to the internet.
There are two basic varieties of cold wallets included in the category:
1. physical wallets made of metal and plastic. When using a hardware-based cryptocurrency wallet, a user stores the private keys to their cryptocurrency balance on a physical media (usually a USB drive). This prevents third parties from accessing the user’s cryptocurrency balance. When the user takes the key out of the hardware wallet, they are guaranteed some measure of privacy because it is a protected device that isn’t always connected to the internet.
2. Wallets made of paper A true low-tech option, a paper wallet requires the user to write down the public and private key information on a sheet of paper in order to save their cryptocurrency.
There are three distinct varieties of hot wallets, which are as follows:
1. Online (web) wallets. The form of cryptocurrency wallet that is found in online services is likely the most widespread and prevalent type. When a user stores their cryptocurrency holdings in an online wallet, the user’s public and private keys are stored in an online service like a cryptocurrency exchange. Users must first log in to the online service in order to access the wallet.
2. Desktop wallets. When using a desktop wallet, the user’s cryptographic keys are kept in an application that is installed on their desktop computer.
3. Wallets for mobile devices For the purpose of gaining access to and making use of cryptocurrencies, a user’s public and private keys can be saved within a mobile application.
Several examples of digital currency wallets
The users of cryptocurrencies have a wide variety of crypto wallets from which to pick, covering every conceivable strategy. Users of paper wallets have the choice of using any kind of paper, notebook, whiteboard, or surface on which they can write a series of numbers. Other alternatives include using a surface such as a credit card.
The following items are some examples of hardware wallets:
• Ledger. Ledger provides users with a variety of alternatives for their hardware wallets, two of which are the Nano S and the Nano X devices.
• Trezor. Both the basic Trezor Model One and the more advanced Trezor Model T are available as hardware cryptocurrency wallets from Trezor.
• SecuX. The V20, W20, and W10 are just some of the devices that are part of SecuX’s expanding lineup of hardware wallets.
• SafePal. The SafePal S1 hardware wallet is the principal product that the company offers, and it is a cost-effective choice.
The following are illustrative examples of hot wallets:
• Coinbase. Coinbase offers users the ability to store their cryptocurrency in an internet wallet, a desktop wallet, or a mobile wallet.
• Exodus. Exodus is a cryptocurrency wallet service that offers desktop and mobile alternatives, as well as the capability to link with Trezor hardware wallets.
• Crypto.com. As part of its role as an exchange, Crypto.com offers its customer base a selection of additional services, one of which is the provision of digital wallets, both web-based and in the form of mobile applications.
• MetaMask. Both a mobile app and a desktop cryptocurrency wallet that operates as an extension on the Firefox web browser are available from the MetaMask platform.
• Trust Wallet. One of the most widely used mobile cryptocurrency wallets, Trust Wallet also offers support for nonfungible tokens (NFTs).
Questions That Are Typically Asked
What exactly is a wallet for cryptocurrency?
A cryptocurrency wallet allows users to save, send, and receive cryptocurrency in exactly the same way that any other digital wallet does. It is a piece of software that saves cryptocurrency in a secure location and maintains a record of all of its transactions, including buying, selling, and lending. A cryptocurrency wallet can be downloaded and installed on a user’s smartphone or any other device that is compatible in a simple and quick manner.
What are the most important functions that a cryptocurrency wallet app should have?
The following is a list of some of the most important characteristics that a crypto wallet software should have: 1. An Authorization System for Users 2. A QR Code Scanner 3. Multiple Cryptocurrencies 4. Importation of Paper Wallets 5. Push Notifications and Additional Information
Is it possible for me to create my own cryptocurrency wallet?
Wallets for cryptocurrency can be built from scratch by businesses, and then the wallets can be integrated with payment systems and other business solutions. A blockchain wallet is typically a mobile bitcoin wallet because of its convenience. After the mobile application has been downloaded onto your smartphone, you will be able to use it regardless of where you are, including in actual stores.
4. What are the steps involved in launching a cryptocurrency wallet company?
You may create a bitcoin wallet app that has the potential to become extremely successful if you have a solid game plan in place.
Let’s get a handle on the process and build a cryptocurrency application together.
1. Get familiar with blockchain technology and cryptocurrency
2. Make use of open-source libraries for mainstream cryptocurrencies.
3. Use APIs
4. Get in the cloud
5. Make sure to use the appropriate technology stack.
6. Accentuate security
7. Take a look at what your rivals are doing.
8. Begin your app development
