Mobile wallets — previously used by the savviest tech aficionados — are poised to explode. In fact, digital wallet users will exceed 4.4 billion by 2025, nearly doubling from 2.6 billion in 2020, according to a report from CNP.
These apps can help people send US Dollars, Euros, or other fiat currencies safely and quickly. But they’re not just for fiat anymore. With the rising popularity of cryptocurrencies, a new generation of mobile crypto wallets is gaining momentum.
Our blog post will define how these apps work and why you should use one today.
What is a Mobile Wallet?
A mobile wallet, also known simply as a mobile crypto wallet, is the most convenient way to send and receive cryptocurrencies. These apps are compatible with mobile phones, tablets, and smartwatches.
Their purpose is to provide a secure place to hold and transfer cryptocurrencies. They also have features like QR codes that simplify payment processing for customers and merchants.
Today, retail shops around the planet are starting to accept crypto, especially as this form of payment becomes more popular among the general public. According to a June 2021 survey from CryptoRefills Labs, among those surveyed who use crypto regularly for payments, 35% make purchases weekly and an additional 40% monthly.
How Mobile Wallets Work
If you have used mobile apps for non-crypto payments, you’ll likely find mobile crypto wallets easy to navigate. However, it’s important to understand the differences between the different types of digital wallets.
Installation and Wallet Recovery
Crypto wallets have various signup formats, and many of them require KYC. Some wallets link to an email and password, while others don’t require any login credentials. In most cases, the setup process is similar to other types of crypto wallets (e.g. web wallets and hardware wallets).
What’s more, some of these apps may require users to write down a “seed phrase” or “recovery phrase.” The purpose is to have a hard copy of a phrase that will help recover their wallets if they lose their login credentials or device.
Be advised that you should never share a recovery phrase with other users. Anyone can use a recovery phrase to access a specific wallet and the funds inside it.
How Wallets Work With Blockchain Technology
When sending cryptocurrency with any type of wallet, users interact with a blockchain. In short, a blockchain is a public ledger that records data. A decentralized network of computers then agrees that the data is legitimate and share that information with the entire network.
In the case of cryptocurrencies, blockchains store information about crypto transactions. Users should be aware that crypto transactions are different than using banks or even non-crypto payment apps like Venmo to send fiat currencies.
Banks can roll back fiat transactions in special cases. For example, a bank will cancel a payment and refund the customer if a merchant charges the incorrect amount or accidentally double charges the customer. In contrast, no central entity can undo transactions on public blockchains. It’s not possible to recover crypto that users send to the wrong crypto address.
This is just one example of how crypto is different than fiat.
Users need to follow best security practices and check that they are sending funds to the correct crypto address.
Custodial and Non-Custodial Wallets
Crypto wallets, including mobile apps, are either custodial or non-custodial. These terms define who holds the private keys that correspond to a wallet’s crypto addresses. Private keys are similar to an extremely long, pre-determined password. Someone with a private key can move funds that belong to the corresponding crypto address.
For non-custodial wallets, the user holds the private keys and has the sole responsibility for securing funds. For custodial wallets, a crypto platform or financial institution holds the private keys. Both types of wallets have their benefits and drawbacks.
Benefits of Using a Mobile Crypto Wallet
Now that you understand a bit more about how mobile wallets work, here is a list of reasons why these apps are an excellent way to store and transfer crypto.
- Convenience — The number one reason to use a mobile app is accessibility. For example, if you plan to use crypto for making payments at a coffee shop, it’s not easy to use other types of crypto wallets that require a laptop. Using a mobile phone is easy for payments because you can scan a QR code associated with the recipient’s crypto address, verify the amount, and send funds in a couple of taps.
- Security — Although hardware wallets are widely known to be the most secure wallet for storing crypto, mobile apps also offer a relatively high level of security. Biometric identification (Touch ID or Face ID) and two-factor authentication (2FA) are two effective security methods. With these measures in place, it’s difficult for someone else to steal funds from your device.
- More Than HODLing — Crypto wallets are commonly associated with HODLing — holding funds for a crypto investment portfolio. Of course, sending and receiving crypto is a great feature, but wallets like Abra provide a platform for activities like lending, borrowing, and trading crypto.
Download Abra and start using a leading crypto mobile wallet! If you haven’t signed up yet, visit our website homepage and tap “Download App” to get started.
Abra Earn enables users to earn competitive APY by lending out their stablecoin and cryptocurrency holdings.
Abra Borrow enables users to apply for a crypto loan and receive funds in a couple of minutes without having to go through a lengthy approval process.
Abra Trade supports trading for 100+ cryptocurrencies, with new listings added on a regular basis.