Since its creation back in 1991, Python has grown to become one of the most popular and versatile programming languages in the world. Through its simplicity, readability, and wide range of applications it has been integrated everywhere even in cryptocurrency.
Can You Build a Cryptocurrency Wallet with Python?
The short answer is simple – yes, and much more. Building a brand new cryptocurrency wallet with Python is not an easy task. For that reason, we’ll walk you through the process of creating a basic crypto wallet using Python, covering all necessary steps such as generating private and public keys and deriving wallet addresses.
Types of Cryptocurrency Wallets
Before you create your 1st cryptocurrency wallet, it’s important to understand the different types of wallets available and their specific use cases. Crypto wallets are typically classified into two main categories:
Hot Wallets
Hot wallets are always connected to the internet,which are ideal for frequent transactions and easy access to your crypto funds. They usually come in mobile apps, web-based platforms, or desktop applications. Hot wallets are not perfect, because they are more vulnerable to online attacks and hacking attempts due to the always online status.
Cold Wallets
Cold wallets are offline wallets that store private keys on a physical device or piece of paper. Because they are not connected to the internet, they are far more secure and are recommended for long-term storage of large amounts of cryptocurrency. Usually, cold wallets are on physical devices like USBs and store the private keys offline. Paper wallets are a printed copy of private and public keys that can be accessible through QR code. If you want to learn even more about cold wallets and devolve into more details you can check this resource.
Which type of wallet you choose depends on how you intend to use your cryptocurrency. Hot wallets are more suited for regular transactions, while cold wallets offer greater security for long-term holdings.
Understanding Crypto Wallets
Before we delve into how to develop the wallet, it is important to define what a cryptocurrency wallet is. At its most basic levels, a crypto wallet is a tool that stores your digital assets and allows you to send, receive, and monitor your funds. There are three fundamental components of a wallet:
Private Key: The key that gives you access to your funds and allows you to sign transactions. It must be kept secret.
Public Key: A cryptographic code derived from the private key, which acts as your wallet address. This can be shared publicly to receive funds.
Address: This is generated from the public key and is used to identify your wallet on the blockchain network.
Prerequisites: Libraries Required
Let’s now find out what is the 1st step on building a simple wallet using Python – few essential libraries. To get started, you need to install some Python libraries that will help you with cryptographic functions and data encoding. The key libraries used are:
ecdsa: Used for elliptic curve cryptography to generate private and public keys.
hashlib: Provides hashing algorithms such as SHA-256, crucial for creating addresses.
base58: Encoding used for generating the final wallet address format.
OS: A built-in Python library for generating random numbers.
To install these libraries you can do it with the help of pip:
pip install ecdsa hashlib base58
Step 1: Generate a Private Key
With every application in Python, the frist thing you need to do for your wallet application is to generate a private key, a 256-bit number that will be used to sign transactions and access funds. In Python, we can use the os.urandom() function to create this random 32-byte private key.
Here’s how to generate it:
import os
private_key = os.urandom(32)
print(f"Private Key: {private_key.hex()}")
Step 2: Generate the Public Key
Once you’ve generated the private key, you can derive the public key. The public key is created using elliptic curve cryptography, specifically the ecdsa (Elliptic Curve Digital Signature Algorithm) library in Python.
We use the SECP256k1 curve, which is widely used in Bitcoin and other cryptocurrencies:
import ecdsa
sk = ecdsa.SigningKey.from_string(private_key, curve=ecdsa.SECP256k1)
vk = sk.get_verifying_key()
public_key = b"\x04" + vk.to_string() # Adding 0x04 byte to signify uncompressed public key
print(f"Public Key: {public_key.hex()}")
Step 3: Generate the Wallet Address
Now that you’ve acquired a public key, you can generate the wallet address. To do this, you’ll apply several hashing algorithms to the public key and format it in a way that can be used as a wallet address.
The process involves hashing the public key with SHA-256, then applying RIPEMD-160 for further compression, and finally encoding the result with Base58.
import hashlib
import base58
# Step 1: SHA-256 Hash of Public Key
sha256_hash = hashlib.sha256(public_key).digest()
# Step 2: RIPEMD-160 Hash of SHA-256
ripemd160 = hashlib.new('ripemd160', sha256_hash).digest()
# Step 3: Adding Network Byte (0x00 for Bitcoin)
network_byte = b'\x00' + ripemd160
# Step 4: Creating a Checksum by Double Hashing
checksum = hashlib.sha256(hashlib.sha256(network_byte).digest()).digest()[:4]
# Step 5: Adding Checksum to the Versioned RIPEMD-160 Hash
address = base58.b58encode(network_byte + checksum)
print(f"Wallet Address: {address.decode()}")
The resulting address is the final identifier for your wallet, which can be shared to receive funds.
Step 4: Testing the Wallet Creation
With the previous step, you have created all the components of a basic cryptocurrency wallet. The next thing to do is to run your code and test the wallet generation process. Every time the script runs, it will generate a unique set of private and public keys, along with a wallet address:
python crypto_wallet.py
This should output the private key, public key, and address, which are crucial for interacting with blockchain networks.
Optional: Enhancing Your Wallet
Now that you’ve successfully created a basic crypto wallet, there are several ways you can extend its functionality and security:
Encryption: To safeguard your private key, you can encrypt it using strong encryption algorithms like AES.
Multi-Signature Wallets: Create multi-signature wallets, which require multiple private keys to approve transactions, enhancing security.
Blockchain Interaction: Build capabilities to interact directly with the blockchain, such as fetching balances, sending transactions, and monitoring activity.
User Interface: Add a graphical user interface (GUI) or a web interface to make the wallet user-friendly.
Conclusion
Hopefully with this guide you will have success and build a simple cryptocurrency wallet using Python. The process we showed is the basics on the simple stuff like generating private keys, public keys, and wallet addresses. But do not stop here, because there are endless possibilities for expansion, including integrating blockchain interactions and enhancing security. Python’s possibilities in the crypto world are limitless, from predicting crypto prices to creating your own wallets.
