How to Create a Cryptocurrency Hardware Wallet like Ledger?
In 2020 the global market of hardware cryptocurrency wallets reached 200 million dollars. Expectedly, it will grow to 877 million by 2026. Furthermore, the average annual growth rate will approximately be 30%. Hence, this sector is one of the best to launch new projects in. This article will tell you how to develop your hardware wallet for cryptocurrencies like Ledge, Trezor, Cobo Vault, or CoolWallet.
Hardware wallets are cryptocurrency wallets that store the private keys (a crucial piece of information employed to authorize the blockchain’s transactions like Bitcoin and Ethereum. The keys are stored on a secure physical device, namely Hardware Security Modules. The primary purpose of the hardware wallets is to provide a discrete, isolated place between the private keys and the computer of the users’ smartphone that are easy to hack.
Most hardware wallets for cryptocurrencies are compact physical devices reminiscent of a USB drive, car keychain, or bank card. Inside that device (let’s look at Ledger Nano S), there is typically a circuit board, microcontroller (STM32F042K), and a security module (ST31H320), where the private keys are. Some wallets have a battery, Bluetooth, Wi-Fi, or NFC modules.
If you use a hardware wallet to store your cryptocurrency token, you can ensure that your assets are safe (yet no wallet will guarantee you 100% protection). Moreover, you can control your balance and receive and send tokens, regardless of location and time. All you need is to have the wallet with you and access to the internet.
Critical advantages of hardware wallets for cryptocurrencies:
To understand the working principle of such a device, think of the hardware wallets as external physical devices where you input your unique PIN code that proves that you are the initiator of the transaction. So to say, if you need to perform a transaction, you take the hardware wallet, enter the PIN code, and process the transaction.
Furthermore, microprocessors for hardware crypto wallets have an operating system to manage the processing environment, adding another security level for further ciphering. Some companies integrate their operating system if it has an enhanced security level. Ledger is one of the examples.
Developing a hardware wallet like Ledger is quite a complicated process that requires a multifunctional cryptocurrency platform that will have the following modules.
It is the frontend part of the hardware crypto wallet that responds to interaction with end-users. They will use it to authorize and set the wallet, buy, accept, and send cryptocurrency assets to other users. The front end of the Ledger wallets has a mobile, desktop, and web interface; you launch your wallet and develop these interfaces and applications.
As mentioned above, HSM is a physical super secure device that protects unauthorized access where the authentication information is stored (for example, the private keys). HSMs can be connected to your computer or smartphone via USB or wireless protocols like Bluetooth or Wi-Fi. Most HSM can do the completed ciphering using the private keys. Hence the private keys never leave the HSM.
Also, you will need to understand that you need an HSM that is compatible with the international standards, like Common Criteria or FIPS 140. This certificate proves that HSM passed the security tests done by qualified professionals. Hence, it is secure and reliable. Furthermore, as your hardware wallet will be used for financial payments, it would be good if HSM will meet the HSM requirements defined by the Payment Card Industry Security Standards Council.
When developing the project’s architecture, this part should be given maximum attention because Backend processes store, protect data for the smooth operation of the wallet. It is the ‘heart’ of your system. Developing the server part on local private servers makes it possible, but Microsoft, Google, and Amazon cloud solutions are much better, straightforward, fast, and cheaper.
Authorization. For hardware, the crypto wallets registration process means creating an account and connecting it to the existing cryptocurrency accounts. It also means the initial setting of the wallet: installation, connecting it to the computer, creating a PIN code, recording the seed phrase, etc. Next, the authorization will go according to a simple scenario (connecting the wallet + entering a PIN code).
Enhanced security. The next thing you will need to focus on to develop your cryptocurrency wallet like Ledger is the users’ data and financial protection. It is crucial for networks like Bitcoin or Ethereum where it is impossible to cancel a wrong or an unauthorized transaction. Hence, the users will doubtfully have an opportunity to receive their money back if it was stolen or sent to the wrong address.
Here are a few pieces of advice that will help you protect your clients’ money.
Managing the crypto assets (balance). This is a core function of any crypto wallet since it helps to buy and sell tokens. Here is the list of the essential things:
Additional functions. If you want your hardware crypto wallet to be popular, you need to make it stand out from the competitors. You can do it by adding additional functions, for example:
We have discussed everything you need to know on finding a technological partner to develop this software in the article: ‘How to choose a company for blockchain development.’ You can use this instruction to find the best developer, or you may directly contact Merehead. Our company has developed blockchain, fintech, and DeFi solutions of any difficulty since 2015. You can study our portfolio and find out the terms of cooperation via email@example.com, by this phone number +1-206-785-16-88, or by the feedback form.
When you have chosen your technical partner, the development process of a hardware wallet like Ledger will go the following way: