Developing a crypto wallet is not as straightforward as many developers might imagine, especially when aiming to support multiple chains, various functionalities, and provide a user experience similar to Web2. Building your own wallet involves significant technical challenges, high development and maintenance costs, and numerous security risks. Below, we delve into why I do not recommend enterprises to develop their own crypto wallets, analyzing the technical details, security risks, and costs involved.<h3>1. Why Indexing Simple USDT Transactions Becomes a Technical Challenge</h3>On the surface, blockchain appears to be an ideal data system—it has a single historical record, is almost append-only, immutable, and precise in its semantics, which should make data indexing and querying easy. However, in reality, indexing transactions for an ERC-20 token like USDT on Ethereum is far more complex than it seems.Suppose you are developing a "Hello World" level wallet, whose goal is simply to:<ul><li>Display the current balance of an account (e.g., USDT)</li><li>Display recent USDT transfer records</li></ul>This seems simple, but doing it quickly and correctly is far more difficult than it appears.First, you need to track on-chain data. You can run your own node (requiring an Execution Layer (EL) like Geth or Reth, a Consensus Layer (CL) like Prysm, each needing around 1TB of disk space, at least a day to sync, plus monitoring and alerting to ensure reliability), or you can use a hosted node API like Alchemy, Quicknode, Chainstack, or LlamaRPC. We have encountered reliability issues, unexpected costs, and even correctness errors with these services. You can solve these issues by using two different nodes and setting up a fallback mechanism. However, even if a node can tell you the current balance of an account, obtaining USDT transaction records is not that easy.<h4>1.1 Challenges in Node Tracking and Indexing</h4>ERC-20 token transfer events on Ethereum are not directly written into transaction logs like ETH transfers. Instead, you need to track all transactions in each block and check if they involve a "Transfer" event from the USDT contract address. This means you must run your own database and node, and the node needs to support the <code>trace_block</code> feature. This is because tracking transfers of tokens like USDT requires tracing the transaction call tree, which is often very slow and expensive.Code Example: Tracing a Block via JSON-RPC<pre><code>import requests
import json

def trace_block(block_number):
 url = "https://mainnet.infura.io/v3/YOUR_INFURA_PROJECT_ID"
 headers = {"Content-Type": "application/json"}
 payload = {
 "jsonrpc": "2.0",
 "method": "trace_block",
 "params": [block_number],
 "id": 1
 }
 response = requests.post(url, headers=headers, data=json.dumps(payload))
 return response.json()

block_traces = trace_block(12345678)
print(json.dumps(block_traces, indent=2))</code></pre>Such tracing operations not only consume a large amount of computational resources, but if you do not run your own archival node, obtaining the complete trace history may take a long time and be costly. For example, using Chainstack to complete a full history trace may take a week and cost more than $1000.<h4>1.2 Challenges in Building Your Own Indexer</h4>Next, you need an indexer to write the blockchain data into a database. You can write your own indexer (don’t forget to handle chain reorgs!), or use existing tools like The Graph, Ponder, or Shovel. Any of these tools will write a large amount of data—imagine a Postgres database with billions of rows of trace data. For such a volume of data, indexing and querying performance will become a bottleneck, requiring very careful design.Even after completing these steps, this is only the mainnet (L1). Considering that Ethereum now runs mainly on various rollups, if you want to display the true balance of an account, you also need to do the same processing for all major chains.These operations do not involve esoteric technology or conceptual difficulty, but their operational burden and performance challenges are far higher than expected.<h3>2. Key Management and Security Risks</h3>Key management is the core part of a crypto wallet. A reliable crypto wallet needs to ensure the safe generation and storage of private keys, which requires the use of a Cryptographically Secure Pseudo-Random Number Generator (CSPRNG) to prevent predictability. Additionally, companies need to consider storing private keys in Hardware Security Modules (HSMs) to further enhance security.For mnemonic phrases and multi-chain support, the derivation paths for multi-currency mnemonics need to strictly follow the BIP44 standard to ensure compatibility and avoid path conflicts. Moreover, for transaction signing, multiple signature algorithms need to be supported, such as ECDSA (used in Bitcoin and Ethereum) and EdDSA (used in some other chains), which means integrating multiple cryptographic libraries in the backend, such as libsodium and secp256k1.Code Example: Private Key Generation and Signing<pre><code># Example of private key generation and signing
from eth_keys import keys
from eth_utils import decode_hex

# Using a randomly generated 32-byte private key
private_key_hex = '0x4c0883a69102937d6231471b5dbb6204fe51296170827961171b68d0b7a54f8d'
private_key = keys.PrivateKey(decode_hex(private_key_hex))

# Sign a message
message = b"Hello, blockchain!"
signature = private_key.sign_msg(message)

print(f"Signature: {signature}")</code></pre><h3>3. Handling Transaction Notifications and Indexing DeFi Assets</h3>Implementing real-time transaction notifications is a major challenge in multi-chain wallet development. For example, Bitcoin has a block time of 10 minutes, while Solana takes only 400 milliseconds—this difference in transaction speed across chains requires a system that can handle such flexibility and synchronize transaction states across multiple chains. To achieve this, we need to use blockchain node WebSocket or JSON-RPC interfaces, combined with message queues like Kafka or RabbitMQ to implement high-concurrency notification pushes.Similarly, indexing and updating DeFi assets and NFTs face challenges such as large data volumes and lack of unified interfaces. Different DeFi protocols have their own smart contract standards, lacking a unified interface, so custom integration is required for each protocol. We can use indexing protocols like The Graph to reduce development workload in this regard.Code Example: Using WebSocket to Listen for Transaction Events<pre><code># Using WebSocket to listen for transaction events
import websocket
import json

def on_message(ws, message):
 data = json.loads(message)
 print(f"Received new transaction event: {data}")

def on_error(ws, error):
 print(f"Error: {error}")

def on_close(ws, close_status_code, close_msg):
 print("Connection closed")

# Connect to Ethereum node's WebSocket interface
ws = websocket.WebSocketApp("wss://mainnet.infura.io/ws/v3/YOUR_INFURA_PROJECT_ID",
 on_message=on_message,
 on_error=on_error,
 on_close=on_close)
ws.run_forever()</code></pre><h3>4. Advantages of KryptoGO Crypto Wallet Solution</h3>Compared to building a crypto wallet from scratch, choosing KryptoGO’s mature solution can significantly reduce the above-mentioned risks and costs. Our KryptoGO Wallet provides APIs and SDKs that allow enterprises to quickly integrate crypto functionalities into their existing applications without facing the complexities of node management, data indexing, and security risks.Advantages of KryptoGO:<ul><li>Quick Integration: Through our Web3 SDK and RESTful API, developers can quickly implement multi-chain transactions, asset queries, and key management functionalities.</li><li>Multi-Chain Support: KryptoGO supports mainstream blockchain networks, including Ethereum, Polygon, BNB Chain, etc., providing cross-chain asset management and transaction support.</li><li>High Security: Our solution has been market-tested, providing high security and stability, and is maintained by a professional team, helping enterprises reduce technical and compliance risks.</li><li>Reduced Development and Maintenance Costs: With KryptoGO's solution, companies do not need to operate and maintain nodes themselves, greatly reducing infrastructure costs and operational burdens.</li><li>Customer Support: We provide professional multi-language technical support to help enterprises quickly resolve issues during the integration process.</li></ul>Choosing KryptoGO can help enterprises quickly and securely enter the market while focusing on enhancing their core competitiveness instead of being bogged down by numerous technical challenges.<h3>Conclusion</h3>Building a multi-chain, multi-functional crypto wallet that provides a user-friendly experience involves significant technical challenges, high development and maintenance costs, and potential security risks. Choosing KryptoGO’s crypto wallet solution allows enterprises to enter the market quickly and securely, focusing on improving their core competitiveness. We hope this technical article helps more engineers understand the challenges of building a crypto wallet and the importance of using third-party solutions.If you are interested in KryptoGO's crypto wallet APIs or SDKs, please feel free to contact us. Our goal is to help enterprises grow rapidly in the wave of blockchain, rather than be hindered by cumbersome technical details.

Developing a crypto wallet is not as straightforward as many developers might imagine, especially when aiming to support multiple chains, various functionalities, and provide a user experience similar to Web2. Building your own wallet involves significant technical challenges, high development and maintenance costs, and numerous security risks. Below, we delve into why I do not recommend enterprises to develop their own crypto wallets, analyzing the technical details, security risks, and costs involved.

In-Depth Technical Analysis: Why Choose a Mature Crypto Wallet Service Instead of Building Your Own

Refining the Waves with Ocean v3: January 22, 2025

Biweekly Update: January 8th, 2025

The '25 Roadmap Preview: December 18, 2024

“The King of Tron” Update: December 4, 2024

Biweekly Update: November 20, 2024

The 'Pulse' Update: November 6, 2024

Five Stages of Evolution for Crypto Wallets

Biweekly Update: October 23, 2024

Biweekly Update: October 09, 2024

Biweekly Update: September 25, 2024

Send Via Link campaign and "Gimme more wallets" Update :  September 11, 2024

The “Send Crypto via Link” Update: August 28, 2024

KryptoGO's Award-Winning Innovations at ZK Hack Montreal, ETHDenver, and ETHTaipei

Stake Your Stables! Biweekly update: August 14, 2024

The “Not Just A Wallet” Update: July 31, 2024

Biweekly Dev Update: July 17, 2024

Biweekly Dev Update: July 3, 2024

Biweekly Dev Update: June 5, 2024

Challenges and Solutions for Using Cryptocurrency in Business Operations

Biweekly Dev Update: May 22, 2024

Biweekly Dev Update: May 8th, 2024

Biweekly Dev Update: April 17th, 2024

Biweekly Dev Update: April 3rd, 2024

Biweekly Dev Update: March 20th, 2024

Making Sense of Decentralized Wallets: EOA and Smart Contract Explained

Biweekly Dev Update: March 6th, 2024

Centralized vs. Decentralized: The Ultimate Guide to Choosing the Right Crypto Wallet for Your Business

Navigating Compliance in Taiwan's Cryptocurrency Market: From Fraud Prevention to Enhanced Regulation

【Kind Reminder】Please be vigilant against scams. KryptoGO will never proactively ask you to make investment transactions.

Biweekly Dev Update: February 21th, 2024

Biweekly Dev Update: February 7th, 2024

Web3 Business Operations: Future Trend or Current Necessity?

Biweekly Dev Update: January 24th, 2024

Biweekly Dev Update: January 10th, 2024

Biweekly Dev Update: December 27th, 2023

Biweekly Dev Update: December 13th, 2023

Biweekly Dev Update, November 29th, 2023

Biweekly Dev Update, November 15, 2023

Biweekly Dev Update: November 1st, 2023

Biweekly Dev Update: October 19th, 2023

Biweekly Dev Update: Oct 4th, 2023

The Chatroom and Social Update: September 20th, 2023

Play-to-Earn vs. Blockchain Gaming: Rediscovering the Joy of Play

Product Launch Update: September 6th, 2023

KryptoGO Launches AI-Powered One-Stop Web3 Cloud Solution

Biweekly Update: August 23rd, 2023

The Keyless Wallet Update: August 9th, 2023

Biweekly Update: July 26th, 2023

Biweekly Update: July 12th, 2023

Biweekly Dev Update: June 7th, 2023

Unlock the Future: Passkey + DID + FIDO - Exploring the Next Generation of Digital Wallets and Identities

Biweekly Dev Update: May 24th, 2023

Biweekly Dev Update: May 10th, 2023

Biweekly Dev Update: April 26th, 2023

KryptoGO team wins three ETHGlobal Tokyo Hackathon Awards! Join hands with YGG Japan and IVC to lay out GamiFi industry

Biweekly Dev Update: April 12th, 2023

Help enterprises enter the Web3 world painlessly! What is WaaS?

Biweekly Dev Update: March 22th, 2023

How Much Does It Cost to Develop a Cryptocurrency Wallet on Blockchain?

How to Navigate the Metaverse: A Guide to 7 Different Types of Crypto Wallets

Virtual asset transaction service KYC, AML demand increased! KryptoGO Compliance work with Gaia Information  pioneered regulatory investigation engine

Biweekly Dev Update: March 8th, 2023

DeFi and KYC: Conflict or Coexistence?

Biweekly Dev Update: February 22nd, 2023

KryptoGO Wallet Updates: Supports Ronin chain, Personal Profile, Wallet Connect 2.0

Biweekly Dev Update: February 8th, 2023

Biweekly Dev Update: January 18th, 2023

Coinbase, the most compliant exchange, has been fined $100 million by the government and given a deadline to fix it.

Biweekly Dev Update: January 4th, 2023

Biweekly Dev Update: December 21, 2022

Biweekly Dev Update: December 7th, 2022

Biweekly Dev Update: November 23rd, 2022

Why can't you get your crypto assets back when the FTX exchange collapses? – Not Your Key, Not Your Coin

Biweekly Dev Update: November 9th, 2022

Biweekly Dev Update: October 26th, 2022

Biweekly Dev Update: October 12th, 2022

Biweekly Dev Update: September 28th, 2022

Things you should know about financial security in the Web3 era: How does token, private key, and wallet (account) work?

Collaboration for Web3 Game Wallets: YGG Japan, KryptoGO, and IVC Join Forces

Biweekly Dev Update: September 14th, 2022

Wanting to issue NFT but is complained about the difficult procedure? —Find out what the marketing pain points are from the “distribution process”

Biweekly Dev Update: August 31th, 2022

Crypto Wallets: Custodial vs. Non-Custodial Wallets

All You Need to Know About VASP FATF

Biweekly Dev Update: August 17th, 2022

Taiwan-based KryptoGO Secures US$3M in Seed Funding

Biweekly Dev Update: August 3rd, 2022

FATF Methodology with the Rapid Development of Virtual Assets 

How to regulate virtual assets? –about FATF Travel Rule recommendations

Different transaction monitoring mechanism between Fiat and Crypto

Biweekly Dev Update: July 20th, 2022

The difference between KYC & AML?

Always being a concern in the bank? Get to know “KYC” in 5 minutes

Biweekly Dev Update: July 6th, 2022

test 123123

Biweekly Dev Update — 20220622

Biweekly Dev Update — 20220608

Biweekly Dev Update — 20220525

3 NFT Tools Help You Manage NFT Assets More Efficiently

In-Depth Technical Analysis: Why Choose a Mature Crypto Wallet Service Instead of Building Your Own

Recommend Articles

Hot Articles

Hot Tags