Are you developing a Bitcoin wallet? Here’s what you need to consider
Bitcoin wallets are a critical cog in the rise of digital currency adoption globally. Today, wallets have gone beyond safe keeping of users’ funds and offer features such as remittances, on/off ramps, day-to-day payments, direct bank withdrawals and more. But what goes into creating the perfect Bitcoin wallet? This was the question the industry leaders in the field tried to answer on day 1 of the London Blockchain Conference.
The panel discussion was moderated by BSV Blockchain Association’s Evan Freeman on the technical stage. The panelists were Centbee founder Lorien Gamaroff, 4chain Studio CEO Michal Pawelski, DotWallet founder Lin Zheming and TAAL’s Liam Missin.
The discussion starts with Freeman asking whether new players must build their own solutions from scratch or utilize existing wallets. Lin pointed out that it all depends on the users’ needs.
“We have to think about the user,” agreed Pawelski. – There are already many solutions out there. Do we need another wallet, or another application to which we hand over important data? For easy UTXO management, you can use existing battle-tested tools.”
The panelists noted that security is one of the most important concerns for anyone building a wallet. Missin says some formats, such as online wallets, have higher security risks. He believes the industry needs more standards to allow different interfaces to interact easily.
“Security is an important issue,” Gamaroff added. He revealed that Bitcoin wallets are “constantly attacked, all the time.” Some, like Centbee, offer non-custodial solutions, easing the burden on security. However, he admitted that this is a band-aid solution as the average user will not be responsible for securing their private keys.
The panelists delved into the dire need for regulations in the industry, having Bitcoin wallets at the operating system (OS) level, and the role financial institutions play in the industry.
The challenges of developing a wallet
Regarding challenges, the panelists noted that regulators have not caught up with the rapid pace of industry development. Centbee, for example, has failed in its quest to be regulated like other remittance companies despite offering the same services through Minit Money.
“If we could get these licenses — since we’re performing the same function but using a different rail — we could enjoy some benefits like easy access to bank accounts,” Gamaroff said.
A few high-profile delistings have also thrown a spanner in the works for wallets, which need to adjust quickly. Also, some popular hardware wallets do not support BSV blockchain, which makes it even more important for BSV blockchain wallets to secure their platforms as they hold large sums of money for their users.
Most wallets offer both online and mobile platforms. According to Lin, the choice of platform depends on the target group.
Another key challenge for Bitcoin wallets has been the ever-evolving industry standards that hinder interoperability. Gamaroff noted that most exchanges still use older systems and addresses and have not yet adopted features such as Paymail and simplified payment verification (SPV).
“It makes things more complex and therefore you have to support everything. Eventually, hopefully, we can scale it down to just a few standards that the whole ecosystem can buy into,” he added.
Another challenge has been integrating older payment systems for on-off ramps. Some, like Centbee, have resorted to offering their liquidity ecosystem where users can withdraw directly to make payments or buy gift cards.
“Once the adoption comes, these problems will disappear,” Missin summed it up.
See: How to make a wallet?
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